Correlation Between Sarthak Metals and Silgo Retail

Can any of the company-specific risk be diversified away by investing in both Sarthak Metals and Silgo Retail at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sarthak Metals and Silgo Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sarthak Metals Limited and Silgo Retail Limited, you can compare the effects of market volatilities on Sarthak Metals and Silgo Retail and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sarthak Metals with a short position of Silgo Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarthak Metals and Silgo Retail.

Diversification Opportunities for Sarthak Metals and Silgo Retail

0.77

Correlation Coefficient

Sarthak Metals  Silgo Retail

Poor diversification

The 3 months correlation between Sarthak and Silgo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sarthak Metals Limited and Silgo Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgo Retail Limited and Sarthak Metals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sarthak Metals Limited are associated (or correlated) with Silgo Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgo Retail Limited has no effect on the direction of Sarthak Metals i.e., Sarthak Metals and Silgo Retail go up and down completely randomly.

Pair Corralation between Sarthak Metals and Silgo Retail

Assuming the 90 days trading horizon Sarthak Metals Limited is expected to under-perform the Silgo Retail. But the stock apears to be less risky and, when comparing its historical volatility, Sarthak Metals Limited is 1.09 times less risky than Silgo Retail. The stock trades about -0.11 of its potential returns per unit of risk. The Silgo Retail Limited is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,187  in Silgo Retail Limited on September 25, 2024 and sell it today you would lose (396.00) from holding Silgo Retail Limited or give up 9.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sarthak Metals Limited  vs.  Silgo Retail Limited

Sarthak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sarthak Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Silgo Retail Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silgo Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Sarthak Metals and Silgo Retail

The main advantage of trading using opposite Sarthak Metals and Silgo Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarthak Metals position performs unexpectedly, Silgo Retail can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Silgo Retail will offset losses from the drop in Silgo Retail's long position.

The idea behind Sarthak Metals Limited and Silgo Retail Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.